Title: Oil edges higher; market wary of U.S. inflation data
Jul 13, 2022 02:55AM ET
Oil rose on Wednesday, a day after its price fell below $100 a barrel for the first time since April, but gains were capped by caution ahead of U.S. inflation data that could weaken the market.
At 0630 GMT, Brent crude futures were up 45 cents, or 0.5 percent, to $99.97 per barrel.
West Texas Intermediate crude in the United States rose 44 cents, or 0.5 percent, to $95.27.
Investors sold positions in oil on concerns that aggressive interest rate hikes to stem inflation would sharply slow economic activity and hit oil demand.
In volatile trading on Tuesday, prices fell by more than 7%.
A further concern is that rising U.S. interest rates will cause the dollar to appreciate, which will also undermine oil prices.
Oil is usually priced in US dollars, so a stronger greenback makes the commodity more expensive for holders of other currencies, which puts pressure on demand.
Stephen Ince, managing partner at SPI Asset Management, pointed to the expected release of likely hot U.S. consumer price index data later Wednesday.
Reuters polled economists expect the data to show that inflation in the United States increased to 1.1 percent month on month and 8.8 percent year on year.
U.S. crude inventories rose by about 4.8 million barrels for the week ended July 8.
Gasoline stocks rose by 3 million barrels and distillate stocks by about 3.3 million barrels, market sources citing data from the American Petroleum Institute said Tuesday.
Meanwhile, the market is also keeping a close eye on U.S. President Joe Biden's visit to the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to increase oil output to help stabilize prices.
In the monthly report released on Tuesday, OPEC expects that global oil demand will grow in 2023 and that the market will remain tight.
The organization estimates that an additional 900,000 barrels of oil per day will be needed from its members in 2023 to balance the market.